Saenger Organization, Inc. v. Nationwide Ins. Licensing Associates, Inc.

• Decision Date: 09 April 1997
• Docket Number: No. 96-2197,96-2197
• Citation: 119 F.3d 55
• Parties: 1997 Copr.L.Dec. P 27,675, 43 U.S.P.Q.2d 1412 The SAENGER ORGANIZATION, INC., Plaintiff, Appellee, v. NATIONWIDE INSURANCE LICENSING ASSOCIATES, INC., Commonwealth Licensing Group, and Lawrence R. Durkin, Defendants, Appellants. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 55

119 F.3d 55

1997 Copr.L.Dec. P 27,675, 43 U.S.P.Q.2d 1412

The SAENGER ORGANIZATION, INC., Plaintiff, Appellee, v. NATIONWIDE INSURANCE LICENSING ASSOCIATES, INC Commonwealth Licensing Group, and Lawrence R Durkin, Defendants, Appellants.

No. 96-2197.

United States Court of Appeals First Circuit.

Heard April 9, 1997.

Decided July 18, 1997.

Ernest B. Murphy, with whom Murphy & O'Connell, was on brief, for appellants.

David J. Byer, with whom Testa, Hurwitz & Thibeault, LLP, Stephen J. Kenney, Medway, MA, and Kenney & Maciolek, were on brief, for appellee.

Before SELYA, Circuit Judge, BOWNES, Senior Circuit Judge, and STAHL, Circuit Judge.

STAHL, Circuit Judge.

This copyright infringement case revolves around a dispute over who owns the copyrights in insurance licensing texts and manuals that were created in 1986. It comes to us on appeal from the district court's grant of summary judgment in favor of plaintiff-appellee, The Saenger Organization, Inc. ("Saenger"), and against defendants-appellants Lawrence R. Durkin, Nationwide Insurance Licensing Associates, Inc., and Commonwealth Licensing Group (collectively "Durkin"). Durkin argues that the district court improperly found that no genuine issue of material fact existed as to Saenger's ownership of valid copyrights in the manuals and Durkin's infringement of them. Thus, Durkin contends that the district court wrongly concluded that Saenger was entitled to judgment in its favor as a matter of law. Durkin further argues that the district court incorrectly determined that the applicable Massachusetts statutes of limitations and frauds barred his state law counterclaims against Saenger alleging fraud, breach of agreement, and unfair and deceptive business practices. For the reasons that follow, we affirm the district court's rulings.

Standard of Review

We exercise plenary, de novo review of a district court's entry of summary judgment. See Ortiz-Pinero v. Rivera-Arroyo, 84 F.3d 7, 11 (1st Cir.1996). Summary judgment is appropriate where there are no genuine disputes as to material facts and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c). We review the record evidence in the light most favorable to the non-moving party, and thus draw all reasonable inferences and resolve factual disputes in favor of the party against whom summary judgment has been entered, in this case, the defendants-appellants. See Den Norske Bank v. First Nat'l Bank of Boston, 75 F.3d 49, 53 (1st Cir.1996).

Background and Prior Proceedings

The Saenger Organization has been in the business of publishing insurance licensing texts and manuals since 1986. Durkin worked for Saenger from 1986 until 1992, during which time he was an officer and vice president of the corporation. Since 1993, Durkin, now the principal of both Nationwide Insurance Licensing Associates and Commonwealth Licensing Group, has been independently in the business of publishing insurance licensing texts and manuals.

According to Durkin, he and Saenger reached an oral agreement in April 1986 as to work that Durkin would do for Saenger. Saenger disputes the existence of any unwritten agreement, but concedes that we must view the record evidence in the light most favorable to Durkin for purposes of this appeal and the underlying motion. According to Durkin, the work responsibilities he undertook in the April 1986 oral agreement included the development of a property and casualty insurance licensing manual, a life and health insurance manual, and several state law supplements. Durkin maintains that the alleged oral agreement contained the following terms: Durkin was to begin immediately to develop, update, and expand these manuals and supplements for Saenger, which would market them; he would become Saenger's vice president immediately upon completion of an existing employment commitment to another firm; he and Saenger would be co-authors of the materials that Durkin would write and co-owners of the copyrights in those materials; and, he would be paid a base salary of $42,000 per annum plus 50 percent of the net revenues of the materials he worked on, with the computation and sharing of such net revenue to begin in June 1987 and to continue in each succeeding fiscal year. Durkin promptly began to work part-time (nights and weekends) on the manuals--as he and Saenger had agreed--even though he was still employed by Educational Training Systems ("ETS"). Durkin and Saenger continued with this work arrangement for several months until Durkin assumed full-time work duties at Saenger's offices in July 1986.

Two of the insurance licensing texts that Durkin worked on during his relationship with Saenger were manuals that came to be titled Life, Accident and Health Licensing Text and Property/Casualty Licensing Text (hereinafter "Life " and "Property " respectively). Durkin claims he authored these works in their entirety, while Saenger contends that Durkin merely expanded and updated previously developed Saenger manuals. In any event, on or about November 26, 1986, Saenger submitted an application for copyright registration, a Form TX, for Property with the United States Copyright Office. About two days later, Saenger submitted a similar application for Life. ¹

The Property application listed July 16, 1986 as the work's first date of publication and indicated that it was a "work made for hire" by the work's co-authors, which the application listed as Bruce W. Saenger (The Saenger Organization's principal) and Lawrence R. Durkin. The application indicated that The Saenger Organization was the hiring party for whom the work was made and was the sole claimant of copyright protection. The Copyright Office responded to the application with a letter dated January 23, 1987, notifying Saenger that "[i]f an individual contributes to or creates a work in his or her capacity as either an officer or employee of a company or organization, the work is considered a 'work made for hire' and the employer should be named as the author rather than the individual." In response to this letter, Saenger completed and submitted a second application for the same work, i.e., Property, again listing The Saenger Organization as the sole copyright claimant, but this time also listing it alone as the work's author. On the basis of this second application, which the Copyright Office received on February 24, 1987, the Copyright Office issued Saenger a copyright for Property (registration number TX 2-011-625), which listed November 26, 1986 as the effective date of registration.

Like the initial Property application, the first application that Saenger submitted for Life listed Bruce W. Saenger and Lawrence R. Durkin as the authors of the work, indicated that it was a "work made for hire," and stated that The Saenger Organization, the copyright claimant, was the hiring party for whom the work had been made. Interestingly, the Copyright Office responded to this application prior to responding to the earlier Property application. By a letter dated December 24, 1986, the Copyright Office notified Saenger that "[w]here a work is 'made for hire,' the employer is considered the author and should be [so] named [on the copyright application.]" In response to this letter, Saenger completed and submitted a second application for the same work, i.e., Life, this time listing The Saenger Organization alone as the work's author. On the basis of this second application, which the Copyright Office received on January 16, 1987, the Copyright Office issued Saenger a copyright for Life (registration number TX 1-983-136), which listed November 28, 1986 as the effective date of registration.

During the period of time when these applications were pending, Durkin asked Saenger about the applications' status. Some time after the Copyright Office sent Saenger the copyright registrations for Property and Life (the record is not clear precisely when), Saenger informed Durkin that the copyrights had "come in from the Office." Durkin did not ask to see, nor did he see, the copyright registrations or any of the applications submitted to the Copyright Office prior to an incident which occurred in April 1992. According to Durkin, while looking through some files in the clerical area at Saenger, he inadvertently encountered a file entitled "COPYRIGHT INFO." He looked inside the file and discovered copies of the applications and the letters described above. According to Durkin, he brought the file to Bruce Saenger's office and demanded an explanation for why he was not listed as a copyright owner, demanded his share of the copyright and copyright revenues, and expressed his view that the copyright registrations amounted to a violation of their oral agreement. Saenger denies that such a confrontation ever took place.

Prior to leaving Saenger in September 1992, Durkin avers that he had regular and frequent discussions with Bruce Saenger concerning the copyright and revenue issues, something Saenger denies. Durkin states that Saenger repeatedly promised him that he would "get around to" changing the copyright to name Durkin as a co-author and co-owner and would make an accounting for monies owed Durkin as a result of revenues attributable to fiscal years 1989 to 1992.

Durkin admits that after he left Saenger in September 1992 he copied substantial portions of both Life and Property and used them in his own text, Fundamentals of Life, Accident, and Health Licensing Text (hereinafter "Fundamentals "). Saenger became aware of Durkin's activities in April 1994. The following month, Saenger advised Durkin to discontinue copying and publishing the written material in question, as it was copyrighted by Saenger. Durkin, however, persisted in publishing and distributing the material. Shortly thereafter, Saenger filed suit in federal district court. The district court preliminarily enjoined publication and distribution of the Durkin materials and...